In the recent past, most FMCG businesses have driven growth at a steady pace, but this has changed.
Evolving consumer and shopper behaviour, a more competitive environment and evolving channels have meant that our traditional approach to winning with customers is not enough. Besides, customers are upskilling and getting equally good at delivering the elements of RGM.
Companies need to evolve their approach to consider these changes, and RGM has been identified in many companies to do this. But who does it?
If our starting point is that RGM is just good brand planning, then RGM is obviously done by the brand marketing team.
But Sales are closer to the point of decision/reality, so maybe it is their job?
Let us consider the levers available to us that RGM covers:
- Promotion management
- Trade spend effectiveness
- Portfolio management.
Does that give you any hints as to who does it?
Whilst you may (or may not) have a team with RGM in their title; it is not only their job. RGM is a holistic approach to commercial levers and therefore owned by everyone. It is the way that businesses build value for their brands.
Traditionally RGM has been seen as a tactical initiative. The companies that get the most from an RGM approach consider it a strategic initiative, using significant insights to derive more benefit and using these insights to allow more granular choices to be made. Better insights allow a complete picture of the opportunities available. These insights should cover category, consumers/shoppers/occasions, channels/customers and competitors. A key success factor for this more strategic approach is that ownership of the outcome needs to be cross-functional, including sales, marketing, RGM and supply chain. It requires an agile approach and an openness to test and learn as a mindset.
The benefits of RGM are huge. Taking an integrated approach delivers big rewards. At least 50% of all promotions are loss-making, as they cannibalise other parts of the supplier’s portfolio. The emergence of ‘new’ channels and further consolidation of existing customers/channels means that price management is even more important. An holistic approach to the commercial levers will deliver more than optimising just one lever. Integrated thinking may limit the cannibalisation we frequently see. Silo thinking limits the benefits that joined-up thinking delivers. RGM should be a proactive decision support team, driving decisions that make a difference. Yes, it should be a specific team in a business, but everyone has a role in implementing the plan.
If you would like to discuss further, let us know. We would be delighted to help.